Greater New Orleans

State spent $63.5 million on Lacassine sugar cane mill, auditor says

The state spent $63.5 million on a failed sugar cane mill in southwest Louisiana, including $6.4 million in salaries for Department of Agriculture and Forestry employees who built the plant, the legislative auditor said Monday. Auditor Darryl Purpera's report said the mill in Lacassine in Jefferson Davis Parish -- along with an $8.5 million rail line built to ship cane from Lake Charles to Baldwin -- brought the bill to $72 million -- with the state getting little for its investment.

Ellis Lucia, The Times-Picayune archiveThe Louisiana Legislative Auditor said Monday the state spent $63.5 million on a failed sugar cane mill in Lacassine, La.

Even though the line was later shortened to drop the cane at the Lacassine mill, it was a financial failure, the auditor said.

The mill was pushed by former Agriculture Commissioner Bob Odom, whose 2007 election opponent, Mike Strain, used it in a campaign to boot him from office. Reached at his home, Odom was ill and unable to comment.

"It appears that the payments made by the state to address the sugar cane farmers' needs were not commensurate with the value received," the auditor's report said.

The report said the mill, which has been idle for about four years, was built for a group of cane farmers that never numbered more than 30. Odom had contended there were no cane mills within 100 miles of the region and that the mill would pay for itself.

The mill was originally budgeted in 2003 for $45 million through revenue bonds secured by slot machine proceeds dedicated to the Louisiana Agricultural Finance Authority. Revenue from the mill was supposed to pay off the bonds. To date, LAFA and the state have made all of the $28.8 million in principal payments due on the bonds, the report said.

After the mill overshot its original $45 million budget, Odom used non-Civil Service employees from this agency to help build the plant.

The auditor said the use of another $650,000 in agriculture department money could not be determined because of a lack of documentation. The agency also spent an additional $383,299 on construction cost overruns, the report said.

In 2006, the mill was sold to Lake Charles Cane-Lacasinne Mill LLC by the Agriculture Department in an all-financed deal with no cash changing hands. Lake Charles Cane is controlled by a Colombian company, Cementos Andinos SA, which also agreed to build an ethanol plant at the site. That plant has not been built, and Lake Charles Cane was officially put in default by the LAFA on March 23 after missing its Dec. 31 loan payment.

The auditor's report said the rail line that was supposed to ship cane is now used to haul other goods, such as oil.

Strain, now state agriculture commissioner, said he agreed with the audit findings, and was working to reduce the state's financial exposure. He said that the bond debt has been reduced from $45 million to $16.1 million, and that his agency has obtained a lower interest rate for the balance. Strain also said his agency has been able to negotiate a reduction in bank loans guaranteed by the LAFA on behalf Lake Charles Cane from $11 million to $6.2 million.

The state is marketing space in the plant and is getting about $70,000 in annual lease payments.